EdWatchesBoxing

When I read the notes on Pabrai's AGM and how he's currently a net seller, I felt that I was in good company ;) Interesting that others on this board feel the same way.

I see your point, but what I was trying to say was that Paulson has leveraged funds and funds that don't use any. I meant to say that if you just look at the funds that don't use any leverage, their performance is solid. Coming back to the topic of this thread, here's the Royce Pennsylvania Mutual Fund (PENNX) http://roycefund.org/Funds/Open/pmf/?fund_id=1. 16.5% return for 35yr period is quite satisfactory. Average Annual Total Returns As of Quarter-End 9/30/09 3Q* YTD* 1YR 3YR PENNX 20.91% 30.84% -3.33% -1.61% Russell 2000 19.28% 22.43% -9.55% -4.57% 5YR 10YR 15YR 20YR PENNX 4.50% 9.90% 10.45% 9.92% Russell 2000 2.41% 4.88% 7.33% 7.87% 25YR 30YR 35YR PENNX 11.18% 12.48% 16.50% Russell 2000 8.95% 10.35% N/A Annual Operating Expenses 0.91% Inception Date: 10/31/1972†

WRT to leverage and Paulson. Strip out the leveraged #'s in the graphics provided above by mpauls and Paulson's performance is excellent, IMO. If I read the Paulson AR correctly, the Merger Arb fund consists of long only positions, while the event arb fund consists of a long/short strategy. With the event arb fund, I believe that it's net short as of the AR date. I think that Paulson and his team know what they're doing, so I would be comfortable with how they are hedging. They seem to have a track record long enough to show that they can perform in good times and in bad.

Here's google's translation: Paris Re and PartnerRe Announce Merger Tuesday, September 29, 08h30 Reuters * Buzzer! * Print Paris Re and PartnerRe announced Monday that their reconciliation would be based on a merger instead of an exchange offer in order to accelerate the acquisition of French reinsurer by its counterpart based in Bermuda. Read Article Stock quote on Yahoo! Finance Course prices BourseStock Company Code Last Price Change ABN AMRO HOLDING 36.95 -- EURONEXT 92.50 -- PARTNERRE LTD 77.67 -- In a statement, Paris Re said that the consideration offered to shareholders would remain unchanged, a ratio of 0.30 share for a title PartnerRe Paris Re This should allow the buyer to take a block of 77% of Paris Re, which will be added to the 6% it already owns. It should be finalized during the month of October 2009. Paris Re has committed to convene a general meeting of its shareholders as soon as this block has been acquired by PartnerRe. Holders of securities Paris Re will then decide "about a merger in which Paris Re is absorbed by a subsidiary 100% owned by PartnerRe", paving the way for the redemption of the shares of French. The statement said PartnerRe should also request the exchange operator Euronext admission of its shares on Euronext Paris. The message from Paris Re does not mention the exact amount of the transaction. It was estimated in July to two billion dollars (1.43 billion euros). PartnerRe, created in 1993 after Hurricane Andrew, has already bought the reinsurer SAFR Paris in 1997 and Winterthur Re, a subsidiary of Winterthur Insurance in 1998. Paris Re was founded in 2006 by a consortium of investors led by Trident III, a fund managed by Stone Point Capital. It also has among its shareholders Hellman & Friedman, Vestar Capital Partners and ABN Amro. Nicolas Delame

The 3 door problem can be verified by working it out yourself. Put the car behind the first door, the goats behind doors 2 and 3, and figure out all the scenarios. Repeat for the car being behind doors 2 and 3 and you'll find that switching improves your chances. This problem came up in the blackjack counting movie, 21, so I already researched this.

These people trading options probably think it's safer because they don't have to put all the capital up. They think only potential loss is the option premium, which is true :) I think yudeng shared the right type of thinking when it comes to options. In general, be a buyer of LEAPs and be a seller of shorter term volatility.

I would take 65 and move the proceeds back into FFH.

I want 1.3X book for my shares, I may try to hold out :D Anyways, I imagine I'll be able to get back into FFH cheaper than what I sold it for to move into ORH. Looking back at the discussion on ORH over the past few weeks, it all makes sense. ORH was an investment that fit in better than the other options mentioned. Thank you Eric for your insight!

I guess you can view EGI as the exact opposite of a Kingsway Financial. They are actually doing their job at EGI.

According to this AGM write-up, Eddie mentioned that Sears would be sold at one point. http://www.valueplays.blogspot.com/2009/05/sears-holdings-meeting-notes.html "At one point in a discussion with a shareholder, Eddie Lampert referred to himself as "a professional investor", which i found very interesting because he could have claimed to be a merchant, or a retail guy. He also said that "At some point ESL will sell shares of Sears Holdings", although they have not sold any since taking K-Mart out of bankruptcy."

I know that the C position was in the 13-F filings, but I think that it may have been part of a long/short strategy. Maybe ESL was short some other bank, or the bond insurers. Hard to say because we don't get to see short positions or derivatives on the 13-F, so I'm just speculating.

If you are a port. mgr for a mutual fund where you need to be "all-in", it is very easy to mitigate career risk. You just make sure you are more diversified than the market benchmark. You want to make sure you smooth out the returns so that you underperform in a bull market and lose less when it's a bear market. People will withdraw less. I'm sure you will not lose your job if you do this. You don't need to be in the top 20-30%. You just need to be mediocre. If you're running a hedge fund/partnership, you hope that your "alpha" period lasts long enough to make you enough in performance fees before that "career risk" event takes place. This type of thing can hit anyone. Munger got hit bad in the 70s and I'm sure many people asked for their money back. Buffett avoided it by rolling his funds into Berkshire. Volatility may be a friend to an investor, but everyone else can't stand it.

Whoa! 17 kids with 4 diff. women, the man lives a very busy life!

Yeah, RE has an extremely emotional component to it. If we assume 20% of the population controls 80% of the wealth, the other 80%, if they are homeowners, probably have most, if not all, of their net worth in their home. This 80% isn't going to care as much about the $5000 they have in an investment account, as they would when housing corrects around 15-30%. The mortgage debt makes the pain worse. Canada's pain is coming. If CMHC data is correct, the avg. homeowner has 10% equity in their home. It won't end well for many. I just wished that I had the ability to figure out when it will start to correct. I'm starting to look stupid to the housing bulls.

"Long term" is any position held overnight.

I work at a finance firm that does arb trading and the traders there don't believe in long term mispricings. I just listen to them and smile. Once, I tried to tell them my story and they looked at me as if I was crack. Their reponse: "We just don't do that value stuff here." They much rather pick up change in front of a bulldozer. I have feeling it's like this in most places.

Maybe their focus on "higher quality" businesses will offset the reduced leverage. Just a shot in the dark. Haha! I think the puck has been shot against the boards and took a sharp rebound. I don't really follow hockey. ;) Looking at the 10-K and recent 10-Q's, you can see that they issued over $350 million worth of shares in 2007 and 2008, so they were probably thinking it was overvalued then. Back in 2006, they issued under $4 million. So far, it's been under $200 thousand. So issuing shares have almost completely stopped. LUK may not be a bargain, but it can be argued that it's fairly valued. I don't know if you can say with any certainty that it's reached an extreme valuation.

The HWIC web-site has been updated! Not many links, but no longer under construction. I just happened to check it out today. I don't know why this was such an exciting discovery for me. http://www.hwic.ca/index.htm

Using Gretzky and hockey, those that believe it's overvalued are probably seeing where the "puck" is, but those that believe there's still value are seeing where the "puck" is going to be. I'm sure that Cummings and Steinberg have a few more tricks up their sleeve before they're ready to call it a day. However, I'm happy indirectly holding it through FFH, ORH, etc.

Sounds like this maybe a cost effective way to set up a long/short portfolio; rather than to use short selling or options.

Pretty easy to see why Berkowitz likes PFE. He's focused on free cash flow and PFE has boat loads of it. Take 10X FCF for PFE and you can easily see why BB thinks it's cheap. I'm sure all the other things mentioned help. FCF is also why BB has Boeing, as mentioned in the OID link posted by jjlin.

Haha, cracked me up with that line. I understand your logic in moving from FFH to ORH, in fact, I was thinking the same thing, because of the relative cheapness (or maybe I read your post first, in that case I will give you all the credit if it all works out). Buy ORH, cheer on FFH to take it private at 1.3 * book.

If ORH is taken private, I imagine it will be similar to NB. NB was repurchasing shares for a while before FFH took them private. It probably wasn't of the same magnitude as the ORH repurchases. From what I remember the avg volume for NB was quite low. They might have been saying, "Look, we'll reward those who held on to the end." Then they offered $39 for the remaining shares. So, if they are really planning on taking ORH private, I'm sure it will be in the 1.3 range to keep it consistent with the NB deal, which is why I plan on taking the proceeds from selling FFH last week, buying ORH, and putting it back in FFH when this is all done. All jokes aside, I agree with Smazz, if ORH can continue to repurchase shares the way that they have been, FFH may wait until they only need to pay the premium to insider shareholders before taking ORH private.

Things are changing at KFS because the Stilwell group got involved. They're slowing steering the ship.

yudeng, you've got me thinking about the long LEAP, short short-term call strategy. I agree with using puts instead of shorting stock. If it expires and you still believe you're right, just buy puts again. No dividends to pay out, etc. I've been reading John Paulson's fund reports and I'm getting interested in the long/short strategy to hedge my bets.